17 Heineken N.V. Annual Report 2004 Report of the Supervisory Board The remuneration comparisons were scaled to reflect a similar size of Heineken, a technique commonly used by independent remuneration experts. It is planned to move salary levels of the members of the Executive Board to the median market level. The current salary levels are significantly below the median market level. Base salary For the members of the Executive Board, the remuneration policy envisages a base salary that is at the median level of the labour market peer group. The base salary for the Chairman will be set 30% above the base salary for the members of the Executive Board. The Supervisory Board intends to adjust base salaries towards policy levels in 2006, i.e. for the Executive Board members to €525,000 and for the Chairman to €680,000. In 2005, the base salary levels will be adjusted by 16.7% in line with the Consumer Price Index (CBS) since 1999 to €418,000 for the Executive Board Members and to €634,000 for the Chairman. Short-term incentive A new short-term incentive will be introduced. At target level, the short-term incentive level for the Chairman will be €422,500 and for the members of the Executive Board €325,000. The maximum pay-out will not exceed 1.4 times the target bonus level. The emphasis of the short-term incentive will be on annual operational performance. Organic net profit growth will be the strategic measure to assess the operational performance of Heineken on a one year basis and accounts for 75% of the bonus opportunity. Organic net profit growth is defined as growth in net profit excluding exchange rate effects, changes in consolidation, amortisation of goodwill, exceptional items and changes in accounting policies. Each year, the Supervisory Board will determine an ambitious, yet realistic organic net profit growth target. The threshold level of pay-out is set at 60% of targeted performance. A linear pay-out curve applies. Part of the pay-out will be subject to meeting an acceptable cash conversion rate. The remaining 25% of the annual bonus will be linked to special yearly targets. The specific targets qualify as commercially sensitive information and cannot be disclosed. Long-term incentive A new long-term incentive for the Executive Board will be presented for shareholder approval. It will be a performance based share plan and a similar plan will also be implemented for senior management in 2006. Each year, a number of shares will be conditionally awarded, subject to meeting a stretching performance target after three years. The value of shares that will be conditionally awarded equals €325,000 for the members of the Executive Board and €422,500 for the Chairman. Based on the share price as per 31 December 2004 (€24.53), this corresponds to 13,250 shares for the members of the Executive Board and 17,225 shares for the Chairman. When conditionally awarded, the value of one share is not discounted for the performance linkage. The performance condition will be total shareholder return, measured over a three year period. The total shareholder return will be measured relative to a performance peer group. If, over a three year period, Heineken performs better than the median of the peer group the Executive Board will be rewarded with shares. These shares will be subject to a holding restriction of two years. Below median, no shares will be awarded. At sixth position, 25% of the target number will be awarded. A linear vest ing schedule applies, with 50% of the target amount vesting at fifth position and 75% at fourth position. At third position, the target amount will vest. If Heineken is ranked first, the maximum number of shares will vest. This is 1.5 times the target amount of shares. Heineken is currently ranked eleventh. The performance peer group is different from the labour market peer group and includes compa nies with which Heineken competes for shareholder preference. It is composed of other brewers, but also includes European companies that operate in the branded consumer products market.

Jaarverslagen en Personeelsbladen Heineken

Jaarverslagen | 2004 | | pagina 23